[South Africa] Spectrum key to driving digital and economic transformation, IDC
It has been more than a decade since the significant release of spectrum for mobile broadband services in South Africa. A limitation that has impacted the industry and citizens in measurable ways. It has constrained growth within the telecommunications market and reduced broadband penetration throughout the country. Spectrum is a relatively rare resource that requires careful allocation to ensure that it does ignite 4IR and drive innovation and economic development, but the delays that have inhibited its release have been frustrating. As Keoikantse Marungwana, Senior Research, and Consulting Manager, Telco & IoT Lead Sub-Saharan Africa, IDC, points out, spectrum is a key national resource that must be efficiently and effectively used to directly drive digital and economic transformation.
“Over the years, the release of spectrum has been delayed by numerous legal challenges brought by market players who felt disadvantaged for various reasons, arguing issues related to the procedures, fairness, legality, competition issues and more,” he explains. “This is because access to spectrum, particularly High Demand Spectrum (HDS) is heavily contested due to the economic opportunities it provides.”
Now many of the challenges that caused delays in spectrum release are resolved through policy certainty, regulatory interventions, court judgements, and consultations between the regulator and market players. This has allowed for improved access to spectrum for smaller players that will increase competition in the market and ultimately benefit the consumer.
“ICASA used an innovative auction process that provides equitable access to spectrum for both smaller and larger network operators,” says Marungwana. “This has then allowed for more players to gain access to HDS across the low- and mid-bands and to accelerate their plans for rural broadband coverage using 4G and 5G technologies.”
A good example of spectrum allocation in action is Rain Networks. The company has increased its portion in the 2600MHz band which will enable them to improve its offering of high-speed fixed wireless broadband (FWA) and to launch new services for enhanced mobile broadband services (eMBB). The company has also used the spectrum auction as an opportunity to move into the low-band below 1GHz with a 20MHz purchase in the 700 MHz band which enables them to launch wider coverage of high-speed 5G mobile broadband and Internet of Things (IoT) services.
“All operators now have additional spectrum resources to grow their network coverage and to deliver improved broadband speeds,” says Marungwana. “This will also give them the impetus and scale they need to launch new and innovative services that use emergent technologies such as 5G, IoT and edge computing. There is also now spectrum certainty as all legal hurdles have been ironed out.”
To ensure that this allocation of spectrum has a long-term positive impact on the sector and country, operators will now need to accelerate their CAPEX outlay for network expansion and upgrading as this will ensure a measurable return on investment (ROI) on new spectrum holdings. A fact not lost on the sector – already there have been several network expansion announcements from operators.
“Moving forward, operators will still put national mobile broadband as the primary goal for expansion and growth, but there remains demand for advanced use cases beyond internet access – from both consumers and enterprise customers,” says Marungwana. “Enterprise customers want private 5G/LTE networks for mining and campus environments and 5G networks with service level guarantees for their mission-critical applications. Consumers, on the other hand, want advanced viewing and gaming experiences that include 4K streaming and AR/VR applications.”
To extract maximum value from the spectrum, service providers will need to invest in these advanced use cases but there remains an uncertainty. The regulatory obligations and restrictions on the licensees will need to provide operators with the flexibility they need to fully exploit their spectrum holdings through many different commercial models and not restrict them to only using the spectrum for themselves. Plus, there is the yet to be determined impact of the government’s revision of the WOAN policy.
“There is a total lack of policy certainty,’ explains Marungwana. “The WOAN policy mandate was clear in mandating the closure of the digital divide, particularly in rural areas, and to increase competition and transformation among players in the telecommunications industry. Yet the reason given for the revision of this policy is that the spectrum ICASA has set aside is insufficient. But this can be solved by prescribing the correct amount of spectrum instead of cancelling it altogether.”
Looking ahead to the future, there are still challenges that have to be overcome within the spectrum situation and its impact on the sector and consumers. The WOAN revision and policy objectives have now been shifted to a new policy called ‘Next Generation Radio Frequency Spectrum Policy’ that is still under development, and operators are still finding their feet in the new allocation and market. This keeps the sector on an uncertain footing, but at least it is one step further than before.